Appeal
from the Superior Court No. 3AN-13-01828 PR of the State of
Alaska, Third Judicial District, Anchorage, Catherine M.
Easter, Judge.
Susan
Orlansky, Reeves Amodio LLC, Anchorage, for Appellant.
Christina M. Passard, Woelber & Passard, LLC, Anchorage,
for Appellees.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger, and
Carney, Justices.
OPINION
STOWERS, CHIEF JUSTICE.
I.
INTRODUCTION
A
former agent, appointed under a power of attorney,
successfully defended an accounting of his actions,
expenditures, and fees against objections and counterclaims
by his former principal. In this appeal we are asked to
resolve whether the former agent is entitled to reimbursement
from his former principal for reasonable attorney's fees
incurred in maintaining that defense. The superior court
denied the agent's request for attorney's fees
because the dispute occurred in the context of a guardianship
proceeding and because the request did not meet the
requirements of AS 13.26.291, which governs cost-shifting in
guardianship proceedings. The agent appeals, arguing that AS
13.26.291 does not apply, that he is entitled to
attorney's fees based on his authority as an agent to
hire an attorney under AS 13.26.665(m), and that he is
entitled to attorney's fees based on common law
principles, equity, and considerations of public policy. We
conclude that neither statute applies, but that the agent may
be entitled to reimbursement of his attorney's fees under
the common law of agency and as a matter of equity. We
therefore reverse the superior court's order and remand
for further proceedings.
II.
FACTS AND PROCEEDINGS
John
Berggren is an Anchorage resident with business and real
estate interests worth over $12 million. He executed a
general power of attorney in 2007 naming Marc Cottini as his
attorney-in-fact-his legal agent[1] - in the event he became
incapacitated. Berggren suffered a traumatic brain injury in
July 2013, triggering the power of attorney. After the
accident Berggren's attorney, David Shaftel, informed
Cottini that he had been named Berggren's agent. Shortly
after Cottini assumed his role as agent, Berggren's wife
Olena filed a petition for guardianship. Acting as
Berggren's agent, Cottini opposed the guardianship
petition on Berggren's behalf. Over the next eight
months, Cottini acted as Berggren's agent until, after
court-ordered medical examinations concluded that Berggren
had regained the capacity to manage his own affairs, the
court terminated the agency. Olena withdrew her guardianship
petition shortly afterwards. The court ordered Cottini to
produce an accounting of his actions and expenditures during
the time of his agency, which he did with the assistance of
Shaftel's law firm. Shaftel represented Cottini in his
capacity as Berggren's agent.
The
accounting requested the court approve $71, 683.57 as
Cottini's fees and costs for acting as Berggren's
agent. This included compensation for Cottini's time at a
rate of $50 per hour. Cottini later declared that the
accounting showed he processed transactions involving $1,
064, 947 including handling Berggren's personal and joint
expenses and paying invoices amounting to $242, 263. Berggren
objected to Cottini's accounting, [2] arguing that
Cottini's actions were not taken to advance
Berggren's best interests, and that Cottini's fees
were excessive.
Berggren
also filed counterclaims alleging breach of Cottini's
fiduciary duties and listing objections to specific requested
fees and costs. Cottini hired a second attorney, Diane
Vallentine, who appeared before the court "for the sole
purpose of representing Mr. Cottini with regard to the Joint
Objection to Accounting of Agent's Fees." Documents
filed with the court consistently identified Shaftel as
representing Cottini in his capacity as agent and Vallentine
as representing Cottini individually; despite making this
distinction, the two attorneys consistently cosigned filings
and worked together.
Eventually,
the parties settled. Berggren agreed to dismiss the
counterclaims with prejudice, withdrew the objections, and
agreed to pay most of what Cottini had initially requested;
Cottini agreed to accept a slightly reduced total amount in
fees and reimbursement in exchange for prompt payment. The
parties reserved all issues regarding attorney's fees for
decision by the court.
Shortly
thereafter, Cottini filed a motion asking the court to award
him $ 148, 254 in attorney's fees incurred for
Vallentine's work in assisting him in responding to
Berggren's objections and in defending against
Berggren's counterclaims. Cottini argued that as the
appointed agent he was required to prepare an accounting of
his actions, expenditures, and fees and that he was entitled
to full payment of the attorney's fees he incurred in
successfully defending the accounting under the power of
attorney statute, specifically AS 13.26.665(m)(4),
[3]
which outlines a statutory agent's authority to hire and
compensate attorneys. Cottini also contended that
attorney's fees were warranted because Berggren had
objected to the accounting in bad faith, and defending the
accounting was necessary to make Cottini whole for his time
and financial expenditures and to ensure third parties would
not go unpaid. Berggren opposed the motion for attorney's
fees, arguing that AS 13.26.665(m) did not apply because the
legal services at issue benefited Cottini, not Berggren; that
while the objections to Cottini's accounting were
ultimately withdrawn, those objections were reasonable; and
that the attorney's fees Cottini incurred were
unreasonable. Berggren also argued that any request for legal
fees should have been made under the fee-shifting provisions
of Alaska Civil Rule 82.
The
superior court denied Cottini's motion for attorney's
fees. The court held that AS 13.26.665(m)(4) did not apply to
the fee request because the statute allows reimbursement only
for attorney's fees incurred for services to the
principal that the agent reasonably believes are desirable
for the proper execution of the agent's powers. The
court, citing Vallentine's limited entry of appearance
for the sole purpose of representing Cottini with regard to
Berggren's objections, concluded that none of the
attorney representation with respect to Berggren's
objections fell within that statutory framework. The court
also concluded that Alaska Civil Rule 82 has been displaced
by AS 13.26.291 (d)[4] as the governing rule for fee-shifting in
any guardianship case, and that this statute required
Berggren to pay for Cottini's attorney's fees only if
adversary proceedings were initiated maliciously,
frivolously, or without just cause. The court found that
Berggren had not acted in such a manner when objecting to
Cottini's accounting and that Cottini therefore was not
entitled to attorney's fees. The court denied
Cottini's motion and did not rule on any of
Berggren's fact-based claims that some of the fees were
excessive or unreasonable.
Cottini
appeals the single question whether he is entitled to
reimbursement for reasonable attorney's fees incurred in
defending his actions and expenditures as Berggren's
agent and in defending his requested fees.
III.
STANDARD OF REVIEW
"[W]e
independently review 'whether the trial court properly
applied the law when awarding attorney's fees.'
"[5] "Determinations of which legal
authorities apply in a case and interpretations of what those
legal authorities mean are questions of law subject to de
novo review."[6] When determining the meaning of a statute,
we "look to the meaning of the language, the legislative
history, and the purpose of the statute, " and
"adopt the rule of law that is most persuasive in light
of precedent, reason, and policy."[7]
IV.
DISCUSSION
Cottini
argues that the superior court erred in relying on AS
13.26.291 to deny his attorney's fees request because the
statute's cost-shifting provisions refer to petitioners
and respondents in a guardianship proceeding, and Cottini was
neither. He also argues that AS 13.26.665(m) contains
specific provisions that govern an agent's ability to
hire attorneys, and that this statute therefore displaces
Alaska Civil Rule 82's familiar fee-shifting provisions
and entitles him to reasonable attorney's fees incurred
in successfully defending against the challenges to his
accounting because the defense also benefited Berggren.
Finally, Cottini points to case law and treatises from
analogous contexts, public policy concerns, and our decision
in Marshall v. First National Bank Alaska,
[8] all
of which he argues support his construction of AS
13.26.665(m), or alternatively support an award of
attorney's fees on either common law or equitable
grounds.
We
conclude that AS 13.26.291, which applies in guardianship
contexts, is inapplicable to the attorney's fees dispute
here because this dispute is between an agent appointed under
the statutory form power of attorney and his principal, not a
respondent contesting a guardianship petition brought in bad
faith. We also conclude that AS 13.26.665(m), while not
inconsistent with the conclusion that an agent is entitled to
attorney's fees incurred in a successful defense of his
accounting, does not provide a controlling rule of decision.
However, we hold that under the substantive common law of
agency and as a matter of equity, an agent may be entitled to
attorney's fees incurred in successfully defending his
actions, expenditures, and fees, depending on a set of
factors outlined in this opinion.
A.
Alaska Statute 13.26.291 Does Not Govern Cottini's Motion
For Attorney's Fees.
Alaska
Statute 13.26.291 provides, in relevant part:
(a) Subject to (d) of this section, the state shall bear the
costs of the visitor and expert appointed under AS
13.26.226(c).
(b) Subject to... (d) of this section, the respondent shall
bear the costs of the attorney appointed under AS
13.26.226(b)...and of other court and guardianship costs
incurred under this chapter.
(d) The court may require the petitioner to pay all or some
of the costs described in (a) and (b) of this section if the
court finds that the petitioner initiated a proceeding under
this chapter that was malicious, frivolous, or without just
cause.
As we recently explained in In re Vernon K,
"Alaska Statutes 13.26.[291](a) and (b) allocate certain
categories of costs in guardianship proceedings to the state,
respondent, and petitioner."[9] Alaska Statute 13.26.291(d),
in turn, "enables the court to shift those costs to the
petitioner '. . . if the court finds that the petitioner
initiated a proceeding under this chapter that was malicious,
frivolous, or without just cause.' "[10] We also held
that "fees of privately retained counsel and experts
qualify for fee shifting pursuant to AS 13.26.[291](d) if the
other requirements of that subsection are also satisfied,
"[11] and that AS 13.26.291(d) therefore
"entirely displaces Civil Rule 82" and
"forecloses any role for Civil Rule 82 in the
guardianship and conservatorship context."[12]
The
superior court concluded that AS 13.26.291(d) was the
applicable standard for determining which party was
responsible for the attorney's fees in this case, relying
on our ruling in In re Vernon H. Berggren argues
that AS 13.26.291 governs because the case now before us was
initiated by a guardianship petition, Cottini was an active
participant in the guardianship case, and Cottini filed his
motion for attorney's fees in the guardianship case.
Berggren also argues that Cottini's fees request falls
within the statute's provisions because of our holding in
In re Vernon H. that fees of privately retained
counsel are covered by AS 13.26.291, and because, as Berggren
puts it, subsection (b) of that statute "provides for
the bearing of costs for 'other court and guardianship
costs incurred under this chapter.' "[13] We disagree.
Our
explanation in In re Vernon H. of how AS 13.26.291
operates makes clear that this statute is inapplicable to
this attorney's fees dispute. As we explained,
"Alaska Statutes 13.26.[291](a) and (b) allocate certain
categories of costs in guardianship proceedings to the
state, respondent, and
petitioner."[14] And "Alaska Statute
13.26.[291](d) enables the court to shift those costs to the
petitioner '. . . if the court finds that the
petitioner initiated a proceeding under this chapter
that was malicious, frivolous, or without just cause.'
"[15] Cottini is not a respondent seeking fees
from a petitioner who initiated a guardianship proceeding,
maliciously or otherwise. He is an agent appointed under a
statutory form power of attorney seeking reimbursement from
his principal for the cost of defending his actions,
expenditures, and fees. Although Cottini requested
attorney's fees for privately retained counsel, and
In re Vernon H. held that fees of privately retained
counsel are covered by AS 13.26.291 (d), that holding was
made in the context of a respondent who was opposing a
guardianship petition.[16]Reading In re Vernon H. to
include the attorney's fees sought in this
principal-agent case would require ignoring the plain
language of AS 13.26.291. Unlike with private attorney's
fees sought by a respondent in a guardianship case, there is
no textual basis for applying AS 13.26.291 to an agent
seeking reimbursement from his principal for attorney's
fees incurred in defending his accounting.
The
superior court's factual analysis also illustrates the
statute's incompatibility with this case. The court's
analysis was not focused on whether Olena Berggren's
initial decision to initiate a guardianship proceeding was
frivolous, malicious, or without cause, as AS 13.26.291
directs.[17] Instead, it analyzed the opposition to
Cottini's accounting, implicitly recognizing that the
real underlying matter at issue was not the guardianship
petition, but rather the dispute over whether Cottini had
acted properly as an agent and was entitled to the
agent's fees he requested. It is entirely coincidental
that Cottini's request arose within the context of a
guardianship proceeding, and we conclude that AS 13.26.291
does not provide the applicable rule of decision in this
dispute.
B.
Alaska Statute 13.26.665(m) Does Not Apply To This Dispute
But Is Not Inconsistent With Awarding Cottini Attorney's
Fees.
Alaska
Statute 13.26.665 provides rules of construction for the
statutory power of attorney form set out in AS 13.26.645.
Berggren used the statutory form. Alaska Statute 13.26.665(m)
provides in relevant part:
In a statutory form power of attorney, the language
conferring general authority with respect to records,
reports, and statements shall be construed to mean that, with
respect to a record, report, or statement concerning the
affairs of the principal, ... the principal authorizes the
agent to
(1) keep records of cash received and disbursed for or on
account of the principal, of all credits and debits to the
account of the principal, and of all transactions affecting
the assets and liabilities of the principal;
(4) hire, discharge, or compensate an attorney, accountant,
or assistant when the agent reasonably believes the action to
be desirable for the proper execution of the powers described
in this subsection; and
(5) do any other act or acts that the principal can do
through an agent in connection with the preparation,
execution, filing, storage, or other use of any records,
reports, or statements of or concerning the principal's
affairs.
Cottini
asserts on appeal that just as AS 13.26.291 removed the
fee-shifting dispute in the guardianship case at issue in
In re Vernon H. from the scope of Rule 82, AS
13.26.665(m) does the same in this case. This is so, he
argues, because AS 13.26.665(m)(4) "expressly governs
the ability of an agent to retain an attorney to assist him
regarding reports concerning the affairs of the
principal" and because Rule 82 applies only when an
alternate fee-shifting framework is not "otherwise
provided by law." Accordingly, he argues that we should
hold that AS 13.26.665 displaces Rule 82 when an agent seeks
to recover attorney's fees from his principal.
More
specifically, Cottini argues that subsection (m)(1)
authorized him to prepare an accounting of his handling of
Berggren's affairs and subsection (m)(4) explicitly
authorized Cottini to retain and compensate an attorney using
Berggren's funds when he reasonably believed this was
desirable for the proper execution of his power as
Berggren's agent to prepare and submit an accurate
accounting. Berggren appears to agree, conceding that Shaftel
was entitled to compensation from Berggren for preparing the
accounting. But Cottini argues further that under AS
13.26.665(m)(4) and (5), he is also entitled to be reimbursed
for retaining Vallentine to assist him in defending the
accounting.
Berggren
responds that AS 13.26.665(m) does not entitle Cottini to
attorney's fees incurred in defending the accounting
because only Shaftel, as the attorney who prepared the
accounting, was hired pursuant to Cottini's authority as
an agent under the power of attorney and AS 13.26.665(m)(1)
and (4). Therefore, Berggren argues, although Cottini would
be entitled to reimbursement for Shaftel's fees, he would
not be entitled to reimbursement for Vallentine's.
The
statute does not help resolve this issue, for several
reasons. First, the dispute hinges on whether retaining
Vallentine to assist with responding to Berggren's
objections to Cottini's accounting was within the scope
of Cottini's powers as Berggren's agent. Cottini
certainly had the power to "keep records of cash
received and disbursed for or on account of the principal, of
all credits and debits to the account of the principal, and
of all transactions affecting the assets and liabilities of
the principal, " as well as to "hire [and]
compensate an attorney . . . when [he] reasonably believe[d]
the action to be desirable for the proper execution of [this
power]."[18] But the proper preparation of an
agent's accounting is distinct from the defense of that
accounting when challenged by the principal, and the latter
does not clearly fall within the scope of the statute.
Second,
even assuming that retaining Vallentine was within the scope
of Cottini's authority as agent, AS 13.26.665 contains no
provisions actually relating to fee-shifting or
reimbursement. The statute instructs courts on how to
construe the powers of an agent outlined in the statutory
form power of attorney.[19] Where the statutory form is used to
appoint an agent, the statute ensures that the agent has the
authority to hire and compensate an attorney on the
principal's behalf while acting as agent.[20] But the
statute contains no provisions obliging the principal to
reimburse a former agent even for indisputably appropriate
expenditures.[21] That is not to say that the principal
has no such obligation, just that one does not arise from AS
13.26.665.
Therefore,
while the text of AS 13.26.665 says nothing to suggest
Cottini is not entitled to reimbursement for attorney's
fees incurred in the successful defense of his accounting,
these fees do not clearly fall within its scope, and the
statute by itself does not require that Berggren reimburse
Cottini for them.
C.
Under The Common Law Of Agency, An Agent Is Entitled To
Reasonable Attorney's Fees Incurred In Successfully
Defending His Accounting If That Defense Benefited The
Principal.
A power
of attorney, such as the statutory form Berggren executed, is
a legal instrument granting authority to an agent to act on
behalf of the principal who executed it.[22]
Berggren's power of attorney established a fiduciary
principal-agent relationship between Berggren and Cottini and
created duties between them. This relationship is subject to
both legislative enactments, like AS 13.26.665, and the
common law of agency as interpreted and promulgated by this
court. And in a common law agency relationship, unless the
parties agree otherwise, the principal has a duty to
indemnify the agent for expenditures that were beneficial ...